The direction the USD takes from here will impact commodity prices, and therefore determine to a large extent inflation/deflation targets. This USD chart, determined to a large extent by the strength or weakness in the Euro, is sending mixed signals.

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The USDU, a more balanced measure of the strength of the dollar, leans more to the bearish interpretation. The top blue descending trend line is one hot potato. After it was broken to the down side, the trend line was back tested precisely at the apex of the consolidation triangle, the focal point of all the bull/bear energy for the preceding year. After failure at the apex USDU is coiling (red triangle) One would expect the triangle to resolve to the down side since the trend on entering the coil is down. No guarantees though.

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This UUP dollar index chart has the dollar at resistance. In fact, all three charts show the dollar at resistance. The direction the dollar takes and the strength (or weakness) of commodities should be apparent very soon…

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